Client Disregarding Contract, Agency playing Dumb and I'm completely lost

[usernotfound]

I've spent days reading articles and other forums and I haven't found answers to my questions. If it so happens that I was being dim and missed something I apologise in advance and would appreciate a gentle nudge in the right direction.

With that out of the way, I'l try and be concise while giving as many details as possible for informed feedback on this.

I started my current contract in October 2019 (one year and got extended till September 2021 due to project requirements ). The site I currently visit the most will close in Sept 21 and the contract would most likely become nonviable for my Ltd after that, even outside IR35 - so no intention to go further than Sept 2021 anyway). The contract is through an agency.

The contract is clearly worded to be outside IR35 and in practice this is also the case. I'm an engineering consultant working for my own consultancy. I do my work how I deem it best to be done (but do consider costumer's opinions into consideration obviously - I don't contractually have to as I am ultimately liable for any shortcomings), there is a right of substitution which was never needed to be used (the customer can refuse the sub if they can prove the sub is not qualified which is normal B2B), my LTD had to supply own safety equipment, my LTD is liable for damage and expenses in the event of mistakes etc... I will conceded that I was forced to use a laptop provided by the customer and certain other SW tools but this is purely to do with the IT infrastructure they have in place at the customer's end, and the bespoke nature of the systems I am helping them deliver: overall the project is massive and I assist with a small aspect of its delivery as the work is very specialised. I'd rather use my own equipment if I can.

Now, the end client has deemed the contract to be inside IR35. In reality this is a blanket ban on independent contractors, but they are masking it as an individual SDS (they have even tried to draw comparisons between the work I do and other contractors who work as technicians doing routine tasks etc...).

Here starts the messy bit:

The client used the CEST, with the wrong information.

1. The customer reps say that they would not accept a substitute, essentially out of principle and without justification (their 'reason' is that they feel they would incur additional overheads, my response: that's not what we've agreed to).

2. They claim I follow their company work instructions: Never even seen one, other than basic H&S stuff and that sort of thing, in fact if anything I have written (unofficial) instructions to help them stay out of my way so I can do my work.

3. They claim the expenses incurred are not substantial. HMRC do not actually seem to set a limit to costs incurred, and I provide my own PPE etc...and don't get given anything other than the aforementioned crappy laptop with some SW on it which is only lent to me to be able to connect to their network and work on their systems, get project communications etc... this is purely to do with their IT infrastructure.

4. That I have fixed working hours and fixed place of work (categorically untrue, I just tend to visit the same sight during the same times but there was never any official agreement for this - its just the easiest way to get stuff done)

The list goes on.

Turns out the Agency seems to have had different agreements with the two parties... so it would appear that even though the contract I signed and was working to was outside IR35, the agreement between the agency and the customer could very well have been different all along, unbeknown to me!

Anyway, the customer is being unbelievably pig-headed about this and the agent is being utterly useless, and generally untrustworthy (see previous sentence).

Now I am pretty much being told I either go umbrella, or stay deemed LTD (but get a reduced rate!). I half heatedly accepted to go umbrella until I find another contract, but haven't actually signed anything yet.

I have read a draft of the new (umbrella) contract and it does seem to be worded differently.

Nevertheless I'm nervous as, although I have nothing to hide, I really don't have the resources to deal with any potential investigation and make a living at the same time. Also I do't believe HMRC and don't trust their competence or their statements when they say they won't investigate without reason to suspect wrong doing (what does that even mean!?)

Given that I was planning to leave in September any way I am starting to wonder whether it is worth me walking away now, but the market is still week because of the whole COVID thing.

Also the most annoying thing in all this is the fact there does not seem to be an independent authority to give a final verdict. Is there?

The very fact that the contract is being changes kind of proves the initial "outside" determination of the original contract.

Going forward I still intend to take the first outside opportunity I see so I can carry on building and growing my business, but this whole situation is quite surreal!

I would appreciate other peoples's opinion on this with perhaps some advice on how to proceed in the least controversial way possible.

[jamesbrown]

You're probably right about the upper contract. It probably did look different to the lower one - your contract. Either way, the client is not onside, which places you at greater risk now, not just after April 5. If it were me, I would walk, but that's easy for me to say. Ultimately, you're in a tricky spot either way because the behavior of the client means that they are unlikely to be supportive under investigation. As to whether you're more likely to be investigated, who knows but, like you, I wouldn't believe HMRC guidance on this.

[northernladuk]

1. The customer reps say that they would not accept a substitute, essentially out of principle and without justification (their 'reason' is that they feel they would incur additional overheads, my response: that's not what we've agreed to).

In a vast majority of the cases the 'agreement' is just wording to keep the contract outside. Someone at sometime got an IR35 contract made up and away they went? If it's the agencies contract then this is definitely the case. It has very little to do with the working practices as it's just a standard one they give everyone. Same issues around the D&C and the like. Now it's on the client they've got to ask themselves, would we really want a sub? No. Do we want the contractor to what we want, how we want when we want if need be? Yes. Bang. Inside.

If you'd sat down with most clients and ask these questions they would have responded the same as far back as you want to go. It only worked in the past because no one asked. That said Psychocandy rather stupidly did ask his client about subs once and they said no so blew his own IR35 status out the window.

Working practices trump the contract, and to go further than that, what the client wants, even though it's may not occur during the contract i.e. to have you under D&C when is suits, them trumps everything else. Nothing new in the current climate.

You are in the same position as everyone else now. Stay and go inside and be at risk of an investigation or leave. I'd be leaving which I did when it hit the public sector a few years ago.

If your client & agent are gonna back track on agreements and contracts then you gotta bet your bottom dollar HMRC will do the same when it comes to clawing back millions.

[usernotfound]

Thanks for the replies so far. This more or less reinforces my concerns. Speaking to the agent, they sounded nervous and very defensive when I suggested that they are the authors of this mess by not being transparent with the both parties (i.e the customer and the supplier).

Not that it would do any actual good, but is there any actual mechanism for appealing the decision?

The only thing I am aware of right now is that I can appeal with the client, but that makes things rather one-sided, especially when the "hiring manager" has no idea of what I actually do, they are just responsible for raising their own internal purchase orders and signing off my invoices. The current "setup" makes them judge, jury, and (suicidal) executioner. I read in a couple of instance that there will be an appeals process come April 6th but I may have misunderstood that, and even then I suspect it would be more grief that it is worth. However, while I won't cut my nose to spite my face, I won't let anyone throw me under any bus either, if I go down they come with me.

I'm thinking I'll probably sit out a month or so before taking up a new contract with an umbrella. Whether that would be with a customer I've already worked with or a new one, remains to be seen.

[northernladuk]

I'm thinking I'll probably sit out a month or so before taking up a new contract with an umbrella. Whether that would be with a customer I've already worked with or a new one, remains to be seen.

And that's the same thing everyone coming here with an outside to inside determination should do. They all think their situation is different and they can fight it etc but not really. Many people are in the same boat and the answer is simple. If you are going to be outside to inside with significant history with the client then you really should (IMO) be getting out quick.

With the OP's situation I wouldn't be waiting just one month to go back inside personally but I'd likely have got a new gig somewhere else in that time period anyway so not really an issue.